1. Which of the following statement is incorrect?

a. Projects with NPVs of zero will not alter the firm’s value but (just) meet the firm’s requirements.

b. Independent projects are the projects that do not compete with each other.

c. The net present value (NPV) of a capital budgeting project is the dollar amount of the change in the value of the firm as a result of undertaking the project.

d. Most of the answers are correct.

e. If the projects are independent, then accept all the projects where NPV is less than 0, reject otherwise.

2. Which of the following statement is correct?

a. Cultural risk is the risk that foreigners doing business in another country will fail to adapt to cultural differences, and this failure will affect the MNC’s success.

b. All the answers are incorrect.

c. The firm using the hedging instruments such as a forward, futures, or swap contract magnifies the foreign exchange risk.

d. Mexican tourists tend to come to the United States in smaller numbers when the dollar is weakening against the Mexican peso.

e. Expropriation of assets is an example of economic risk.